Briefing by Eskom Enterprise on Strategies & Action Plan; Adoption of Report on Brazil & Argentina Study Tour

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Public Enterprises

15 May 2002
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Meeting report

PUBLIC ENTERPRISE PORTFOLIO COMMITTEE

PUBLIC ENTERPRISE PORTFOLIO COMMITTEE
15 May 2002
BRIEFING BY ESKOM ENTERPRISE ON STRATEGIES AND ACTION PLAN; ADOPTION OF REPORT ON BRAZIL AND ARGENTINA STUDY TOUR


Chairperson: Mr BAD Martins (ANC)

Documents handed out:
Eskom Enterprise Annual Report 2001 (link to Eskom Enterprise website)

SUMMARY

Eskom presented their strategy and action plan. Their Chief Executive Officer highlighted the progress of Eskom Enterprises and its vision of providing power to the whole continent of Africa and the rest of the world. Members questioned Eskom on what it is ploughing back to the community of Africa and how it is doing so.

The Committee also adopted the report on their Argentina and Brazil study tour.

MINUTES
Mr J A De Beer: Chief Executive Officer, Eskom, presented an overview on the missions and objectives of Eskom Enterprises. He said that they would like to grow as a company and they see the whole world as a possible market.

He outlined the objectives of Eskom Enterprises for 2002 and also looked at its management structure. There are five Executive Directors and five non-Executive Directors. Eskom has about 28000 members at the moment.

Mr De Beer then looked at the core lines of business of Eskom Enterprise. Eskom Enterprise is trying to bring together electricity, information technology (it) and telecommunications. They are doing this because these three forms of technology work together. One cannot work effectively without the other.

Mr De Beer looked at different entities of Eskom Enterprises.

Technology Service International (TSI)
He said tsi is the research component of Eskom. It is a multi - disciplinary division of Eskom Enterprises offering proffesional consulting engineering services, technology solutions, research and development, project management and operation management services to the energy sector and related industries. They also have tsi (pty) ltd.

Trans - Africa Project (Pty) Ltd
He said that the electric transmission engineering and project management company continues to grow concerning its efforts in the sub saharan region and looking to expand into the middle east and certain other target markets.

Bonesa Electricity (Pty) Ltd
He said that bonesa has been running for two years as an implementing agent for south aftrican leg of the efficient lighting initiative. The funding for the project has come from the global enviroment fund and Eskom.

Protection, Tele- Control And Measurements (Ptm)
He said that ptm seeks to provide a total outsource service to manage, design, erect, commission, maintain and operate electrical plant system for utilities and large industries. They seek business opportunities in non - traditional markets through the business development and marketing functions. This project is important to Eskom Enterprises as they can sell it to Africa but they do not have necessary skills to run the property.

Pebble Bed Modular Reactor (Pty) Ltd
He said that south Africa is dependant mostly on coal for energy. They would have to buy power from other countries in the future. They have been doing a survey of some South African coalmines.

Mr De Beer looked at the commercial division of Eskom Enterprises, which is divided into three entities. They have tried to bring a black empowerment programme into the commercial division. They do not need to own these entities but simply need to have access to them.

Telecommunications Department
Mr De Beer said that the division is expanding especially to Africa. They have a number of initiatives in the African continent. They have a licence for long distance communication networks in the Democratic Republic of the Congo. They are still negotiating with the other African countries.

Aviriakom (Pty) Ltd
Aviriakom is a state owned information technology company which was formed in January 2001. Eskom Enterprises is a major shareholder in the company, with 45 % of shares. Since its formation, Aviriakom has acquired significant contracts.

Involvement in Africa
Mr De Beer reported that they are involved in different parts of Africa, in about 30 of the 52 African countries. They have also done work in other parts of the world. They are very much involved in southern African countries. For instance, they run the largest power station in Zimbabwe. They are also involved in other southern African countries. These countries have to pay in advance with South African Rands as Eskom Enterprises does not want to deal in credit with these African countries. They also have business ventures in other parts of Africa.

Where is the Enterprise going?
Mr De Beers said that they want to get access to the rest of Africa within the next five years. They want to provide power and telecommunication services to the rest of Africa.

Eskom Enterprises priorities for 2002
Mr De Beer said that Eskom Enterprises are in the process of taking the enterprise to the people. The Enterprise needs money and wishes to sell some of their entities in order to generate money for the business. The Enterprise is thinking of investing money overseas in an equity fund so as to generate more money. They are fast becoming power providers in Africa and are looking for ways to generate more money for the business. South Africa is playing a major role in the development of Africa.

Discussion
Mr Heine (DP) suggested that the documents that would be presented in the meeting should be given to the Members before the meeting to give the Committee enough time to study the reports. There was a report that Eskom Enterprises are losing hundreds of thousands, did Eskom have any security measures to try to fight this loss of money.

Mr De Beer said that there has been cable theft especially in Gauteng. They have some measures to try to stop cable theft but these copper thieves has some special skills.

Mr Komphela(ANC) said he had many questions to ask. He wanted to know how efficient the toll free system was in the process of trying to fight cable theft.

Did Eskom have employees who are foreigners and if so what currency are they paying them in? Does Eskom pay for the tertiary education of any students, to enable them to acquire the skills that would be important to Eskom in the future?

Mr Sibiya (IFP) asked what the plans are to sustain the power stations for a long time. Many power stations are not in use at the moment, what are the plans for these power stations in as far as black empowerment is concerned?

Mr De Beer responded that there is coal in South Africa but in terms of investment, coal is less attractive. Coal in South Africa is in the 'wrong' places, mainly in Mpumalanga while growth in South Africa is in other places, mainly near the coast. Eskom is trying to sustain the power stations. When the power stations that Eskom is currently using get exhausted, they would use the power stations that they are currently not using.

Mr De Beer said that in terms of acquiring skill, Eskom has a strong training approach. They have spent around R6 million to train engineers.

Mr De Beer said that they have few foreign employees. Their employees from African countries are paid in Rands although in some exceptional cases they pay in foreign currencies.

A Member expressed concern that all the Executive Directors of Eskom Enterprises are men. Is this a reflection of Eskom? How is Eskom ploughing back to the community and what progress has been made on the process of electrification in the rural areas?

Ms Ngcengwane (ANC) asked about the number of disabled employees in Eskom. She also asked about the number of Eskom entities that are owned by black people and how Eskom is ploughing back to the rural areas in South Africa.

Dr W Odendaal (NNP) asked how far Eskom is in the process of electrifying Africa and how long will the process take to finish.

Mr De Beer said that the Enterprise does not have women executive directors but they have them in the Eskom Company. It is hard to find suitably qualified persons since there were few women who were attracted to the engineering profession but they are trying to get more women to higher posts. They do not have as many disabled employees as they would like to have.

Mr De Beer said that Eskom is ploughing back to the community and they spend millions on electrifying the rural areas.

Mr De Beer they have done much work in Africa but there is still much more to do. They would like to have electrified the whole of Africa in the next five years but that is an almost impossible task, as there are many places in Africa without electricity.

Mr De Beer said that they are trying their best to empower black people. They have programmes to assist with black empowerment within Eskom Enterprises.

Mr Komphela (ANC) asked how Eskom Enterprises deals with black owned companies that are in joint business with Eskom. Does Eskom want money in front as they sometimes have difficulties in finding finances from the lending institutions?

Mr De Beer said that they have joint ventures with some black owned companies. They own percentages in different companies in different parts of Africa. They are having some management problems with some companies that they have joint ventures with.

Ms Mpaka (ANC) said that there is a mention in the report of associates and wanted to know who are those associates.

A Member asked if there is someone being mentored to take the position of Chief Executive after Mr De Beer.

Mr De Beer said that their task as management is to grow the company. It is not the Enterprise that takes the decisions but the company's stakeholders. The council together with the Minister appoints the board of the company.

He said that succession planning is in progress and there are people who are trained to take the position of chief executive after him.

Mr Montana said that they have received the AGM report from Eskom and are looking at it.

Adoption of Report on Brazilian tour
The Chairperson said the Brazilian and Argentinean report should be adopted. Two members of the Committee supported the report and it was adopted.

The meeting was adjourned.

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